Friday, February 28, 2014

Economist conducted much of his Nobel-lauded research on matching theory at Pitt

PITTSBURGH—Alvin E. Roth, co-winner of the 2012 Nobel Prize in economics, will be the keynote speaker at the University of Pittsburgh’s 38th annual Honors Convocation, to be held at 3 p.m. Feb. 28 in Carnegie Music Hall, 4400 Forbes Ave., Oakland. All members of the University community are invited to attend.

Honors Convocation recognizes the accomplishments and contributions of Pitt alumni, faculty, staff, and students. Chancellor Mark A. Nordenberg will preside over the celebratory event. He will bestow an honorary doctoral degree on Roth, who began and completed much of the economics research for which he won the Nobel Prize while serving as Pitt’s first Andrew W. Mellon Professor of Economics from 1982 to 1998. Roth is now the Craig and Susan McCaw Professor of Economics at Stanford University and the George Gund Professor of Economics and Business Administration Emeritus at Harvard University.

“The University’s Honors Convocation recognizes the significant achievements of Pitt people who are pursuing academic, scholarly, and professional excellence in their fields,” said Chancellor Mark A. Nordenberg. “Our friend and former colleague Nobel Laureate Alvin Roth is an exemplary representative of the legacy of excellence that the University of Pittsburgh has established and upon which it continues to build. It will be a special pleasure to welcome him back to Pitt.”

Roth won the Nobel Prize along with Lloyd S. Shapley, professor emeritus of economics and mathematics at UCLA, for solving a key economic problem—how to match players in a market in the best possible way.

Beginning in the 1960s, Shapley developed a body of theoretical work in which he used Cooperative Game Theory to study matching. He found that it is important to find a “stable match,” meaning a match in which there are no two agents who would prefer one another over their current counterparts.

When Roth was a Pitt faculty member in the 1980s, he began using Shapley’s theoretical results to explain how matching happens in practice. He studied the medical job market and eventually began to implement his findings in existing programs like the National Resident Matching Program that matches newly minted doctors with residency positions at hospitals. In another case, he worked with Pitt economics alumnus M. Utku Ünver (A&S ’97G, ’00G) on a study that led to improvements in the design of a program to match kidney donors with compatible kidney recipients. He also has assisted with developing a system for matching students with schools.

When announcing the prize in 2012, the Royal Swedish Academy of Sciences said of Roth and Shapley: “Even though these two researchers worked independently of one another, the combination of Shapley’s basic theory and Roth’s empirical investigations, experiments, and practical design has generated a flourishing field of research and improved the performance of many markets. This year’s prize is awarded for an outstanding example of economic engineering.”

While at Pitt, Roth was the recipient of the 1992 Chancellor’s Distinguished Research Award. He also served as a Fellow in the Center for Philosophy of Science and a professor of business administration in the Joseph M. Katz Graduate School of Business. His work was also influential in developing the field of experimental economics at the University.

“Central to Prof. Roth’s work on market design has been the use of theory and laboratory experiments. Under his leadership, the Department of Economics at Pitt became, and is still regarded as being, one of the leaders in experimental economics,” said Lise Vesterlund, Pitt’s current Andrew W. Mellon Professor of Economics.

The University of Pittsburgh Department of Economics proudly presents the 2014 McKay Lecture "Market Design: The Economist as Engineer" by Alvin Roth, Nobel Laureate in Economics.

Market design is an ancient human activity but a relatively new part of economics. It seeks to understand how the design of markets and marketplaces influences their performance, to use this growing understanding to fix markets when they're broken, and to help to establish markets where they are missing.

Mr. Roth is the Craig and Susan McCaw Professor of Economics at Standord University and the George Gund Professor of Economics and Business Administration Emeritus at Harvard University. From 1982 to 1998, he was the Andrew W. Mellon Professor of Economics at Pitt. He shared the 2012 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Roth directed the redesign of the National Resident Matching Program, through which 23.000+ doctors a year find their first employment. He also has helped to reorganize the market for more senior physicians as they pursue subspecialty training. He helped to design the matching systems for students in several large American cities. He is among the founders and designers of kidney exchange in the United States (along with a number of colleagues with Pittsbugh connections), which helps incompatible patient-donor pairs to find lifesaving compatible kidneys for transplantation.

Tuesday, February 25, 2014

From the editors' summary in the first article ("The concise argument")"

"For over half a century the subject of organ transplantation has attracted ethical debate. One such ongoing debate, provoked by the severe scarcity of organs for transplantation and a concern to increase their supply, has been about why willing live donors should continue to be prohibited from offering their own organs for sale. Against allowing this, it has often been argued that prohibition protects people in poverty from being driven to, and then harmed by, this desperate last resort. But is that how such people in poverty themselves see it? From their point of view, it has been suggested, wouldn't it be reasonable to see prohibition as depriving them of their best option, leaving them worse off than if they had been able to exercise it? Isn't the claim to protect people in poverty therefore ‘misplaced paternalism’, providing no ethical justification for prohibition?

"In this month's feature article, Simon Rippon (see page 145, Editor's choice) mounts a serious and sustained challenge to that conclusion. He argues that while it would be reasonable for people in poverty to sell their organs if given the option, it would be equally reasonable, given the ‘significant and unavoidable’ harms of a live organ donor market, for them to prefer not to have this option at all. In her commentary on Rippon's paper, Janet Radcliffe-Richards (see page 152) acknowledges that ‘a plausible case for prohibition would probably take this form’, but goes on to argue that ‘although in principle prohibition need not be paternalistic, in practice it is’, since it ‘has been imposed on everyone irrespective of any consultation’. To this, and two further commentaries, by Gerald Dworkin (see page 151) and by Adrian Walsh (see page 153), Rippon responds (see page 155) in a significant contribution to a debate that nevertheless seems likely to continue unabated as long as the need for whole organs continues so greatly to exceed their supply."

"Some one in 12 schools is shunning traditional catchment areas in favour of rules designed to engineer a more balanced student body and break the middle-class stranglehold on places.

"The shift is being driven by a rise in the number of academies and free schools whose admissions policies are independent of local council control.
...
"Research by The Sunday Telegraph found that the proportion of highly oversubscribed secondary schools using lotteries or “fair banding” systems rises close to 100 per cent in parts of London. Across England, half of councils confirmed that at least one school in their area now used them.
...
"The Department for Education said admissions were run by individual schools or councils but insisted places “should be allocated in a fair and transparent way”. Parents will find out which state secondary school their children have been allocated on March 3 as part of National Offer Day.
Most schools have traditionally allocated places based on the distance between a pupil’s home and the school gates. This has allowed wealthier parents to buy property close to the best schools to secure places, with research suggesting that living in the catchment area of a highly sought-after school can add an average £31,500 “premium” to house prices.
But admissions guidance introduced by Labour allows institutions to employ a series of measures designed to break the stranglehold.Lotteries, or “random allocation”, involve some or all applicants having their names drawn from a ballot, giving pupils living several miles away the same chance of a place as those next door.“Fair banding” sees all applicants sit an aptitude test, with a set number of bright, average and low ability pupils being admitted. Schools usually use distance or a lottery to decide who gets a place within each ability band. Mrs Wallis said many parents “find fair banding complicated”, but insisted it was preferable to straight lotteries because “its goals are clearer”.

"Last week, The Sunday Telegraph obtained data on the admissions policies of more than 1,400 schools – 43 per cent of those nationally. Half of local authorities surveyed said at least one school in their area used lotteries, fair banding or both.
In total, one in 12 of the schools identified employed these admissions policies. Twice as many used fair banding as lotteries"

Sunday, February 23, 2014

While preparing for a talk I gave in England, I recently reread my 1990 paper: Roth, A.E., "New Physicians: A Natural Experiment in Market Organization," Science, 250, 1990, 1524-1528.I hadn't recalled it, but this was the last paragraph of that paper:"It is noteworthy that the simple idea of pairwise stability formulated by Gale and Shapley (5) has turned out to have so much empirical power. I think their paper has thus proved to be the kind of theoretical work that merits the highest scientific recognition."